The end game for many small and medium-sized enterprise (SME) owner managers is to retire in the confidence that they are leaving the business - their ‘baby’ that they have worked tirelessly to develop and grow - in the capable hands of a new team.
Whether your succession plan involves a trade sale, handing it to the family – or selling up in an MBO/MBI, the crucial consideration is how you make the business an attractive proposition to be carried forward.
A myriad of external factors - including red tape/new legislation, the shifting economic backdrop and sector related issues - can substantially influence how much you walk away with.
Irrespective of the above, planning and positioning are critical to derive the best value from the transfer.
If your business has enjoyed sustained success, it will employ highly skilled, motivated, loyal, optimum performers; be seen as a destination employer; continually delight clients whose expectations are forever exceeded; and post year-on-year growth.
However, no matter how successful you are, unless your company has a robust succession plan you will not realise the value you are seeking. To avoid being handcuffed to the business forever, taking the following steps and bear in mind that it takes around three years to groom a business for sale.
- Appoint a managing director
Making this appointment enables you to step back from the company and work ‘on’ as opposed to ‘in’ the business. You will know where only you add value as a leader and may initially retain ownership of, for example, quality control innovation.
- Ensure your management team is up to scratch
- Compile ‘How to’ guides
- Demonstrate a strong customer pipeline
- Keep your accounts faultless
- Develop and retain your staff
Investing in the necessary grooming will undoubtedly enhance your company’s desirability for prospective purchasers. While implementing the above steps, also make some time to plan what you are going to do with your time and your life post work. Having spent the past 2-3 decades engrossed in your work, many business owners have failed to achieve a work-life balance and are unprepared for retirement both financially and psychologically.
Establishing a life plan for yourself will go a long way to ensure you enjoy a rewarding, fulfilling and well deserved retirement.
By Melanie Hird, director of Seneca Investments